Explanation of key categories and terms

Allegation: A claim of wrongdoing. A single complaint or enquiry may contain several separate allegations.

Complaints: A complaint is a matter lodged with or referred to the Inspectorate for assessment in its capacity as the dedicated integrity agency for local government in Victoria. Most of the complaints we receive relate to councils but not all complaints we receive fall within our remit.

Complaint assessment: When the Inspectorate receives a complaint, it undergoes an initial assessment to determine, among other factors, if the allegations fit within its legislative remit or the matter should be transferred to another agency. A matter is not considered under investigation at this stage.

Enquiries: An enquiry is any contact received by the Inspectorate that does not progress to an investigation. Enquiries are mainly questions from the public and complaints that fall outside our remit. Enquiries may involve multiple contacts with the public but only a single reference is included here.

Investigations: When the Inspectorate receives a complaint that falls within our jurisdiction, we conduct an investigation into it. Most of our investigations resolve allegations about improper conduct and contraventions of the conflict of interest provisions by councillors.

Prima facie: In the Inspectorate’s work, this refers to the presence of sufficient evidence to establish a fact or raise a presumption unless disproved or rebutted. It can also refer to matters that, on first appearance, may be a breach of offence under the Act but are subject to further evidence or information.

Prosecutions: The Chief Municipal Inspector is empowered by the Local Government Act to prosecute individuals in a court. This power is taken very seriously and prosecutions are only pursued under certain circumstances. The Inspectorate must consider whether there is a reasonable prospect of conviction, whether or not it is in the public interest and whether or not there is an alternative to prosecution that may be more appropriate.

Public interest disclosure: In some circumstances, a complaint may be considered as a public interest disclosure (previously known as a protected disclosure or ‘whistleblower’ complaint). If a complaint appears to show that a councillor or member of council staff has engaged or proposes to engage in improper conduct, this could constitute a public interest disclosure. These matters must be sent to the Independent Broad-based Anti-Corruption
Commission (IBAC) so they can determine whether or not the protections under the public interest disclosure regime apply.

Warnings: A warning is issued when a prima facie breach of the Act is substantiated, but circumstances show that a prosecution may not be warranted. Warnings given to a person are considered if any further substantiated complaints are made against the same person.

About us

The Local Government Inspectorate is the dedicated integrity agency for Victorian councils. We are responsible for investigating offences against and breaches of the Local Government Act 2020 and examining any matter relating to a council or council operations, including electoral offences and activities.

As part of our role, we:

• assess and investigate complaints about some council operations, including councillors and council staff
• monitor governance and compliance with the Act
• provide guidance and education for councils
• encourage transparency and accountability across the sector.

The Chief Municipal Inspector heads the Inspectorate and reports to the Attorney-General (with respect to powers derived under the Local Government Act). This statutory position allows for the delegation of powers to Inspectors of Municipal Administration and has the remit to investigate offences and breaches under the Local Government Act or examine any matter relating to a council or council operations.

Our work can be categorised into three main areas.

Enquiries, complaints and investigations

The first part of our work responds to the community. We take enquiries from the community, councils and councillors. We provide advice and guidance on the Act and good governance principles. Sometimes we refer these enquiries to other agencies if they fall outside our jurisdiction.

We take complaints and conduct a thorough assessment to determine if they warrant further investigation. To start an investigation, we need to have sufficient information to suspect that a breach of the Act has occurred, which means conduct that would constitute a relevant offence. In serious cases, we will prosecute offences against Act.

By law, we are only able to investigate matters where we have jurisdiction, meaning we are not able to investigate all local government complaints.

The Inspectorate makes up one part of Victoria’s integrity framework that provides confidence in the state’s public sector. This framework is in place to mitigate the risk of poor behaviours, practices and even corruption in our councils, government departments and other agencies. Where required, the Inspectorate will refer complaints to other integrity agencies.

Governance examinations

The second part of our work is to measure compliance with the Act. To facilitate this, we conduct governance examinations of

individual councils where a need has been identified, or of a particular topic across the entire sector. The results of these examinations are published on our website, along with best- practice examples, and other material that will help councils improve compliance. We conduct governance examinations and reviews of individual Victorian councils or look at topics that affect many or all councils. We often publish reports on our governance examinations, and provide examples of best practice governance directly to councils and on our website.

Guidance and education

The third part of our work is to provide guidance and education to the sector. This guidance is generated from ongoing or new themes and topics in complaints, investigations and governance examinations. While we do not have a specific legislative remit to provide guidance and education, it is a vital aspect of our work to make sure that councils and the community understand relevant laws and how the Inspectorate operates.

We provide presentations to councils and councillors, publish a newsletter and produce reports and other communications tools.

Case management system

Our Lotus Notes-based complaints management system has reached the end of its lifecycle and will soon no longer supported by the Victorian Government IT provider, CenITex.

Producing investigation reports and statistical analysis using the current system is also extremely labour intensive. Consequently, replacing the system is an urgent priority.

A project was established with technical experts from the Department of Justice and Community Safety to replace the old system with modern, fit-for-purpose that can enable improved tracking of cases, trend analysis and reduce data duplication across multiple software packages.

Supreme Court ruling

On 29 November 2021, the Supreme Court delivered a decision to confirm that the Victorian Civil and Administrative Tribunal (VCAT) continues to have the power under the Local Government Act 2020 to make orders to have a councillor stood down whilst criminal proceedings are continuing.

Under the 1989 Act, we had certain powers but the retention of these powers under the 2020 Act was questioned in a VCAT hearing.

Justice Quigley delivered the judgment, settling an important question of law regarding section 229 of the Act. Her Honour ruled that decisions can be made without first having satisfied the elements set out in the preceding subsections in Division 6, Part 7.

Council visits

Speaking to councils and councillors is at the heart of what we do. It is vital for us to meet with councillors and remind them of their obligations under the Act and learn from their experiences. We also visit councils to make presentations, conduct interviews and do governance examinations.

These activities were restarted after the lifting of COVID-19 restrictions and when travel across Victoria returned to normal. We have since made trips to the southwest, northwest and northeast. We have also visited and presented to councils in metropolitan Melbourne.

Personal interests returns

In October 2021, we released a report into a wide-ranging governance examination of the personal interest declarations of 650 councillors. The Inspectorate conducted an examination of all councillors’ returns for 78 councils between October 2016 and February 2020. An examination of Whittlesea councillors’ personal interests returns was conducted as part of a separate investigation.

Along with other integrity agencies, we have identified that incomplete and inadequate personal interest disclosure is a historical and ongoing issue affecting the local government sector.

Personal interests returns: Encouraging disclosure and increasing transparency revealed details about how many councillors submitted accurate returns in this period, what they failed to disclose and some of the reasons they gave for failing to make the disclosures.

Councillors and key council staff must provide – and regularly update - accurate records of their personal interests under the Act.

We published the report to make public the issues attached to the submission of personal interests returns. The report also included recommendations to law makers and to those required to submit returns to improve both the process and the level of compliance.

Campaign donation returns

Following the 2020 council elections we conducted a review of campaign donation returns. The Act requires that all candidates must submit a declaration to the chief executive officer of the council where they are standing for election within 40 days after the election. They must make this declaration even if they received no donations of money or in-kind support worth $500 or more.

Our investigation found that, of a total of 2,192 candidates, 144 failed to submit a campaign donation return within the required 40 days. However, 34 candidates subsequently submitted a late return.

The remaining 108 candidates who failed to comply were issued with an official warning.

However, the rate of non-compliance had halved compared to the 2016 council election when 290 candidates failed to comply.

It is pleasing to see an improvement in the number of candidates declaring their campaign donations in 2020 compared to 2016 and we will continue our guidance and education program with the aim of ensuring candidates understand their responsibilities to submit campaign donation returns for future elections.

Enquiries

The Inspectorate regularly receives enquiries from community members, councils and councillors seeking advice, information or raising issues that fall outside our jurisdiction. We endeavour to help with enquiries where possible. Enquiries that do not fall within our remit are referred to other Victorian Government agencies or bodies representing the local government sector.

In addition to the 203 Investigations completed in 2021–22, we resolved 158 enquiries. A large number of enquiries are complaints about councillor code of conduct matters, which are to be dealt with by individual councils. Other enquiries include planning matters and complaints about council services.

Historical data

In previous annual reports, we have published the number of complaints and investigations we had handled in the financial year. However, historically, we have not had clear or consistent criteria for the way we categorise enquiries, complaints and investigations. Our case management system is outdated and the data it produces is limited. This meant we had to manually calculate the enquiries, complaints and investigations and the criteria we used to calculate them changed over time - making benchmarking them difficult.

As the volume of our work has increased, it has been harder to compile this data manually. We are currently in the process of developing a new system to help us more accurately track our statistical information. Once this new case management system is operational, we will have consistent criteria and more accurate statistics.

Because of these issues, we have not included our historical data in this annual report. Our historic data does not accurately reflect the long-term trend of increasing volumes of complaints, enquiries and investigations.

We also have also decided to no longer report the number of complaints we receive as this is not an accurate reflection of the work we do. Once we receive a complaint, we assess it to see if it warrants further investigation.

Sometimes completing an investigation is straightforward to assess and determine an outcome and may take a short time. On other occasions an investigation can be very complex involving interviewing large numbers of people and reviewing a voluminous amount of evidence and can take many months to complete. The length and complexity of an investigation can impact the number of other investigations and enquiries that can be allocated to an investigator and completed during a twelve-month period.

Investigations

The Inspectorate investigates complaints regarding allegations of breaches of and offences against the Act. Some complaints consist of multiple allegations, for example,
that a councillor has breached the conflict of interest and misuse of position provisions.

Investigations involve our inspectors gathering evidence to determine whether the allegations can be substantiated. This process determines whether the allegations:

• constitute a breach or offence under the Act

• should be referred to another responsible authority; or

• do not breach or amount to an offence under the Act.

Allegations made

* When we start an investigation we may find that the complaint involves multiple allegations which are all part of the single investigation.

There were 203 investigations, consisting of 330 allegations, conducted by the Inspectorate in the 2021–22 financial year. The Inspectorate may launch an own motion investigation into any matter that potentially breaches the Act. This usually happens when we hear about information from interviews, media reports or other intelligence we have gathered. Ten own motion investigations were completed in the 2021–22 financial year.

Of the investigations conducted, 34 per cent raised allegations of conflict of interest, 17 per cent raised allegations of misuse of position, 6 per cent included allegations of disclosure of confidential information, and 2 per cent raised allegations of directing council staff. Forty one percent raised allegations of other matters such as electoral offences, eligibility to be a councillor, and serious misconduct. As mentioned above, we are working on developing a new case management system which will give us more accurate data about our enquiries and investigations.

Subject matter of investigations

Note:

* This table shows the number of allegations investigated. A single investigation may involve multiple allegations. The 203 investigations conducted during 2021–22 consisted of
330 allegations.

** Section 76D of the Local Government Act 1989 and section 123 of the Local Government Act 2020.
^ Section 76E of the Local Government Act 1989 and section 124 of the Local Government Act 2020.
^^ Section 77 of the Local Government Act 1989 and section 125 of the Local Government Act 2020.
^# Sections 77A-80C of the Local Government Act 1989 and sections 126-131 of the Local Government Act 2020.

Reasonable Assistance Provisions

Under the Act, the Chief Municipal Inspector has powers to require the provision of reasonable assistance (also known as coercive powers). This may require a person to produce documents and evidence or appear for an interview under oath. In 2021–22, the use of the powers were approved on 5 occasions to obtain documents or information from people.

We interviewed 24 individuals in 2021–22 and all the interviews were conducted on a voluntary basis.

Official warnings

Warnings are issued for matters where a breach of the Act is substantiated but an alternative to a prosecution is considered to better serve the public interest.

Warnings are used as an educational tool in making recipients aware of their obligations under the Act and of the consequences for further transgressions.

During 2021–22, we issued 132 official warnings. A total of 108 warnings were for failures to submit an election campaign donation return, 20 were issued to real estate agents who inappropriately voted on behalf of persons for whom they manage properties, two were in relation to failures to declare a conflict of interest, and two were for personal interests returns failings.

Recommendations

We provide recommendations following our investigations and governance reviews. The recommendations aim to improve compliance with the local government act and improve governance and transparency. Sometimes our recommendations are for the peak bodies for councils (the Municipal Association of Victoria, Local Governance Association of Victoria and Local Government Professionals) or Local Government Victoria, the team within the Department of Jobs, Precincts and Regions which supports Victorian councils.

The majority of our recommendations are for councils. During 2021–22, we issued 34 recommendations to councils. Of these, 20 were accepted and implemented, a further six were implemented after the end of the financial year and a further eight remain under consideration. Our recommendations may involve a decision of council or actions like additional training or policy development, which take time for a council to implement.

Governance examinations

We conduct governance examinations of Victorian local councils to measure compliance with the Act, identify process deficiencies and to make recommendations for future improvements.

Our governance program aims to give councils tools to improve compliance, transparency and develop better practice processes.

We typically conduct two types of governance examinations:

• we examine an individual council across a range of council practices
• we examine a particular topic or theme across all councils or a selected group of councils.

We will identify a council to visit or a topic or theme during investigations, feedback from the sector or information form the community.

Movement restrictions limited our ability to visit individual councils and so we focused on theme-based projects during 2021–22. We concluded a major investigation into personal interest declarations during 2021–22 and started another project to examine documents needed under the new Act.

We use a range of communication tools to provide guidance to the local government sector and education to the general community. We publish reports, newsletters, presentations, social media posts, and fact sheets and use our website to provide this information.

We also engage with the Victorian Government, councils, council representative bodies, the community and other stakeholders through other channels, such as speaking engagements, presentations and meetings.

General engagement

The travel restrictions which were in place in the state due to COVID-19 continued to impact on our face-to-face engagement in 2021–22. When our movement was restricted, we made use of online tools to present to councils across Melbourne and Victoria.

We presented to councillors and governance staff at councils including Nillumbik, Wodonga and Murrindindi, and to online audiences at sector representative bodies such the Victorian Local Governance Association, Municipal Association of Victoria and the Western Australian Department of Local Government, Sport and Cultural Industries.

However, once travel restrictions were relaxed, we headed out to speak to councils to conduct in-person interviews and collect information for investigations. Once we were able to travel, we also visited rural and regional councils including Warrnambool, Mildura, Gannawarra, Yarriambiack and West Wimmera. We also presented to councillors from Greater Shepparton in person.

Newsletter

The Inspectorate published four newsletters to provide information and updates about significant reports, investigations, events and other relevant information.

Newsletters were sent to more than 3,540 subscribers and published on the Inspectorate website. The content was a mix of information about our work and guidance to councils and councillors to improve the understanding of and compliance with the Act.

Resources for councils

The Inspectorate produced a wide range of fact sheetsin 2021–22 to simply explain the complex processes and legislation. The fact sheets aim to help council staff, such as governance officers, with straight-forward information on topics, including:

• when personal interest disclosure need to be made
• which integrity agency handles specific types of complaints
• what comprises a conflict of interest under the Act.

We also produced short, easy-to-read summaries of our governance and investigation reports.

These publications were produced to answer questions we are often asked and to assist complainants, councils and the community to better understand our work and key aspects of legislation.

Social media

The Inspectorate uses its Twitter and LinkedIn accounts to provide updates on its work and highlight key issues for the sector.

We saw a modest increase in queries directed to our @CMI_Vic Twitter account about election campaigning practices, councillor or candidate behaviour or council activities.

Website

The Inspectorate website provides information about the Inspectorate, our powers and our work. We also publish guidance and education material to improve understanding of and compliance with the Local Government Act.

The website contains our reports, media releases, newsletters and the secure online complaint form.

Our people

The Inspectorate had 12 full-time equivalent (FTE) positions filled as at 30 June 2021. We also employed two contractors for part of this period and had one full-time equivalent position vacant.

Challenges and opportunities

Recruiting qualified and experienced staff has continued to be challenging during 2021–22. However, we were successful in recruiting two new staff members with the right skills and experience for their roles.

Complaint volume has been increasing on the same gradual annual trend since our creation in 2009 but budgetary constraints continue to limit our ability to expand our team to meet increased demand.

We continued to explore other avenues, such as issuing fines to candidates for not submitting campaign donation returns, and to councillors and senior staff for non-compliance with interest return requirements. This is a lengthy process that we are hopeful of completing in the next financial year.

Freedom of information

The Inspectorate received and responded to four Freedom of Information (FOI) requests in 2021–22. FOI requests are handled in accordance with guidelines and processes set down by the Office of the Victorian Information Commissioner.

Gifts and benefits

Our staff were not offered and did not accept any gifts or benefits during this financial year. We publish the gifts and benefits for this and previous years on our website under the policies and registers section.

Financial information

Under the Public Administration Act 2004, the Inspectorate is an administrative office hosted by the Department of Justice and Community Safety and the Inspectorate uses corporate services, including finance, from the department. Financial information is incorporated into the Department of Justice and Community Safety’s 2021–22 Annual Report.